what effects government borrowing has on currency? what does ‘crowding out’ means? why is some ‘deficit...

what effects government borrowing has on currency?

what does ‘crowding out’ means?

why is some ‘deficit spending’ by government isn't a bad thing?

Expert Solution

Government borrowings does not directly and suddenly affects the currency but it has a show and significant hand in destruction of value of currency. What actually happens is that when the government takes Liam from foreign countries in that particular year The value of our domestic currency is so much increased but I'm The Long run the same money goes out with an interest. Which decreases the value of domestic currency.

Crowding out is a situation where personal consumption of goods and services and investments by business are reduced because of increases in government spending and deficit financing sucking up available financial resources and raising interest rates.

Deficit spending. How is it useful.

Deficit financing is a great Factors of an economic growth of a country. I'm any country their are no already excess resources which can be used for developmental projects, so for such reason deficit financing is a great option.

Rahul Sunny answered 17 hours ago

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Does government borrowing crowd out public sector spending?

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What is crowding out?

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What effect does deficit borrowing have on long term growth?

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